Comments, observations and thoughts from two left coast bloggers on applied statistics, higher education and epidemiology. Joseph is a new assistant professor. Mark is a marketing statistician and former math teacher.

Monday, February 15, 2016

What's the point of advocating any economic policies (either using left or right wing logic) on the basis that they will boost economic growth and create jobs if as soon as the Fed thinks that there might be upward pressure on wages at some point in the distant future they're going to raise interest rates?

Mostly because it makes it clear that economic feedback cycles are potentially quite complex. If the government taxing money (as an example) slows growth and thus the federal reserve doesn't have to act to slow growth then do we not end up with public good benefits and the same growth rate?

I am sure it is an oversimplification, but so is the lower taxes will always increase growth. We have not been seeing that in failed states, have we? Nor did periods of English history like the Anarchy really help England grow economically, despite the weakening of central power. Especially if central power is replaced by local power, which is often more arbitrary (ever interacted with a homeowner's association?).

Finally, as Megan McArdle points out, there really isn't that much more to cut with Federal taxes except among the very high earners, unless you want to remove payroll taxes. Whether or not that would increase growth, it would have a very bad effect on current retirees.

It is certainly worth pondering if we shouldn't refocus on how to make sure that the money collected is spent effectively instead of obsessing about the amount that is spent.